Pre-Plan Your Home Loan

Owning a house is a lifetime dream for many of us. And the easiest way of accelerating and fulfilling that quest is to avail a home loan. However, the first step towards fulfilling this dream should be preparing a check list. It will certainly help you make the complete process easier and smoother. Here are the six essentials you should ensure while planning your home loan.

Step 1: Evaluate your budget
Draw a budget sheet and evaluate your income and expenses. Also consider your contingencies and savings before you decide on the loan amount and, therefore, the kind of home you want. Be realistic in your approach – your loan should not end up being a burden due to unforeseen circumstances.

Step 2: Check your credit report and score
This is a rather unusual step! Many of us feel that this would be done by the lender before the organisation grants us the home loan. As your credit report and score can decide the fate of your loan application, it will be wise to check the report and score yourself before applying for a loan.

Step 3: Choose your property
Before you start looking for a lender, you should probably search for the property that suits your requirements. Check if the said property is part of any legal dispute and if the builder has a good reputation and a good track record for on-time delivery. If everything seems fine, go for it!

Step 4: Ownership title
Pre-plan the property ownership and also who the borrowers will be for this loan. This is important for your income tax planning. It also helps the lending institution quantify your eligibility when it knows your obligation towards this loan.

Step 5: Choose your lender
Features like interest rate, type of interest (for instance, fixed or floating), repayment option, other fees, etc., play a key role when you select a lending institution. Compare and evaluate the options available but most importantly, consider your priorities and repayment capacity before zeroing in on one of them.

Step 6: Read the loan agreement
This might be the last step, but definitely not the least! Do not be in a rush to sign it. Certain terms in the agreement may have the potential to compromise you. This makes reading the agreement extremely crucial before committing to any of its terms & conditions.

These simple and easy steps will help you save a lot of time and be your guide in pre-planning your home loan. Don’t forget, it is a way to realise your dreams.

About the author: Satish Mehta is the founder and director of Credexpert, a credit & debt counselling company.

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